16 Ways to Increase Business Value Before Putting It on the Market
There are many reasons to sell a company, from industry changes to lifestyle shifts to sweet, sweet retirement. No matter the reason, every business owner wants to sell their company for top dollar so they can walk away with a decent profit.
Even if your business is already highly valuable, it could likely be worth more with a little planning and adjustments. Before you put your business on the market, take steps to increase its value and make it more enticing to buyers.
We will break down the many ways you can increase your business’s value before selling, but it boils down to four main goals:
- Optimize your business.
- Stabilize your business.
- Make your business attractive to buyers.
- Make your business accessible to buyers.
These goals are intertwined, as optimizing and stabilizing your business will automatically make it more attractive to buyers. Below are the precise ways you can achieve these goals, increase your business value, and sell for the maximum price.
Organize Financial Records
Make sure all your financial records and data, from taxes to purchase orders, are concise and tidy. It’s much easier to attract buyers and sell a business when your finances are clear and organized, allowing buyers to get an honest overview of financials. Well-prepared financial records can also address any suspicions or concerns.
Invest in Marketing and Brand Reputation
Reputation is everything; even a struggling business can sell for a profit if its reputation is strong enough. Before selling, invest generously in marketing to boost your brand reputation and carve out a space for your company in the industry. Make your business’s name as valuable as possible.
Find Opportunities to Increase Profits
Of course, business owners always want to increase profits. However, it’s especially important to do so before trying to sell. The better your profits, the more your business is worth. If you have some ideas to boost profits that have been on the back burner, now is the time to try them out.
Create a Comprehensive Business Plan
If you don’t already have a comprehensive and up-to-date business plan in place, it’s time to create one. A traditional business plan gives potential buyers substantial insight into what the business is, what it offers, how it works, its goals, and more. A business plan makes your company accessible to buyers in the sense that they can easily glean its potential and worth by reading this report.
Implement Efficient Operations
Do everything you can to optimize your operations. This means streamlining and assessing all systems, processes, and procedures in place. Ensure all operations are strong, consistent, and logical, showing buyers that the business is a well-oiled machine. Consider implementing new technologies, automation, and advanced equipment.
Secure a Stable Business Location
Buyers don’t want to take on a business that shows any kind of instability. One of the simpler ways to show solid operations and stability is to have a long-term and beneficial location. This might not apply to businesses in certain industries, but it’s important for many. Ensure your business has a location—whether it’s a brick-and-mortar store or a manufacturing facility—where it can reside for at least a few years after the sale.
Diversify Revenue Streams
The most stable and successful businesses often have more than one revenue stream. The more sources of income your business has, the more appealing it is to buyers. If your main revenue source is product sales, consider setting up subscription services or selling data to third parties.
Nourish Vendor Relationships
Similar to having a stable business location, having strong vendor relationships makes your business attractive to buyers because it shows consistency. They don’t have to worry about finding vendors and building those relationships because you’ve already done it!
Build a Diverse Client List
If your business generates most revenue from a small handful of clients, you should try and extend that client list before going to market. Relying too heavily on a few clients makes a business seem risky. Consider how you can increase business value by targeting new demographics, offering referral rewards, and expanding advertising.
Eliminate Unnecessary Expenses
Along with increasing profits and diversifying revenue, look for places where you can trim the fat. Streamline company spending, drop products or services that perform poorly, and remove all nonessential costs. Assessing the ROI of each expense is an easy way to identify where you can cut costs.
Set Up a Strong Team
Thriving staff and efficient management are extremely enticing to buyers who don’t want to build a team from scratch. Ensure your workforce is optimized, diverse, and satisfied. Eliminate redundancies, and don’t settle for mediocre performance. A savvy team also shows potential buyers that the business can continue to succeed ever after you, the owner, leave.
Show Projected Growth
While your business plan should include projected growth, having extra, more detailed reports on expansion and profit potential is useful. The more robust your projected growth plan is, the more assured potential buyers will be in taking on this investment.
Firmly Separate Business and Personal Expenses
Mixing personal finances with business makes things murky. If you’ve done this, it’s okay, but you must fix it long before you put your business on the market. Separate business and personal expenses completely as soon as possible. Potential buyers will see mixed expenses and add-backs as high risk or even suspicious.
Draft a Transition Plan
Mergers and acquisitions can be highly complicated and take months or even years to organize and execute strategically. One of the most impressive and beneficial things you can do is create a detailed transition plan that shows buyers precisely how the business will continue to operate as you exit and the new buyer enters. This ready-to-go plan instills confidence in them, as they can envision how the transition will play out.
Develop a Unique Selling Point
Why is your business special? Why should an investor commit to owning this company? What sets you apart from the competition? Have answers to all these questions articulated so you can show potential buyers that your brand is unique and desirable. It could be a creative concept, distinct strategy, or inventive branding. Identify your uniqueness and enthusiastically present it to buyers.
Enlist an Expert Advisor
Lastly, don’t do all this by yourself. Executing these strategies and substantially increasing your business value is difficult, so it’s best to enlist the help of an experienced advisor. Catalyst Group ECR can guide you through these tasks and ensure you maximize your business’ value before selling.
Final Thoughts: Increase Business Value Today, Not Tomorrow
If you’re considering selling your company, even if it’s a tiny thought in the back of your mind, start taking steps to increase its value now. The sooner you start, the easier it will be to profit from your business sale.
Don’t wait another day to begin optimizing your business and preparing it for potential buyers.
Contact Lori Moen at Catalyst Group ECR and get expert help making your business irresistible before it even hits the market!
